All we want, Santa, is a profitable new year

IT'S that time of year when For Sale signs are being replaced by brightly decorated trees.

Open for inspections are wrapping up, save for one more by a fat man in a red suit.

And while children everywhere are looking for airborne reindeer, many grown-ups have begun looking to next year in the hopes of spotting where the market will fly and give home owners a healthy return on their investment.

Real estate asked the experts to look back at 2012, then gaze into their crystal balls to predict what will happen next year.

But with better clearance rates at auction than at the end of 2011, Real Estate Institute of Victoria spokesman Robert Larocca said he expected the slow 2012 to pave the way for a healthy start to 2013.

"That should lay the foundations for a more healthy market in 2013, with a higher volume of sales and sustainable price increases,'' Mr Larocca said.

A good sign, according to Mr Nugent, is that property values may be coming up.

"Over the last four or five weeks prices seem to have firmed a little bit,'' he said.

"Looking at values now relative to this time last year, we could be up 5 per cent.''

What to expect:

Mr Larocca said negative impacts on consumer confidence, employment and home loan volumes would hurt the market - but even with all going well a good balance between supply and demand made large price increases unlikely.

"The big question for 2013 is, `Will the median reach the peak of $580,000 again?','' he said. ``At this point I doubt it will but there will be progress towards it.''

Some gains are to be expected thanks to the market offering buyers a great position, according to Wakelin's Mr Nugent.

"Are you ever likely to buy better at such low interest rates? There's a really healthy balance to what's happening in the market,'' he said.

Interest rates are likely to remain a major factor and there's good news on that front as far as property developer Michael Yates, director of Michael Yates and Co, is concerned.

"The low interest rate climate, you would think, will stay like that for a while,'' he said.

A year to buy

After an anticipated strong start to the year the market is more likely to settle into a similar pattern to this year, according to Mr Nugent.

"It will continue to be a good year to buy, because there are relatively good levels of availability,'' he said.

But those hoping to sell should expect plenty of competition, with RP Data analyst Cameron Kusher warning the amount of choice is likely to remain high.

The year should be good for buyers.

"There's no need for them to make a decision quickly -- buyers can be pretty choosy and don't need to hurry,'' Mr Kusher said.

Where to watch

Suburbs to watch for established housing in the inner-city include Brunswick, South Yarra, Hawthorn, Richmond and Northcote, WBP Property director Greville Pabst said.

"These areas are going to continue to perform and that's because they sit on incredibly valuable land,'' he said.

"And the same could be said of the established flat market, in those same suburbs, typically (flats) constructed anywhere from the 1930s to 70s -- the lower density flats are going to see very similar levels of growth to inner-city housing.''

Mr Pabst tipped continued growth from the middle ring, suburbs within 20km of the CBD.

Hocking Stuart chief executive Nigel O'Neil said buyers would have to be clear about what they wanted.``If affordability is your driver, the inner-west of Melbourne still represents great value,'' he said.

"From a long-term perspective, look at where the government has planned for housing and commercial development - Box Hill, Broadmeadows, Dandenong, Footscray, Frankston, Geelong and Ringwood.''

For those considering an apartment, developer Mr Yates suggested South Yarra, Richmond and Middle Park.

"We are in the Melbourne selling season now and the investors have been sitting on the sideline, but have now started to spend again -- so I now have the impression that people are ready to re-enter the market place,'' he said.

What to watch

Established property will be the safe money, according to Mr Nugent.

"You don't need to speculate in this market - stick with blue-chips while the prices are down,'' he said.

For those wanting to sell, buyers seem to be more attracted to low-maintenance living at the moment, according to Mr O'Neil.

"With the demand of increased workloads and less time to spend playing house, we've seen a trend for buyers seeking low-maintenance properties with generous entertainment areas rather than large backyards,'' he said.

"People are getting more and more used to living in more medium and high-density living than would our parents and their parents,'' he said.

Rolling the dice

Apartments in Docklands and the CBD have divided the experts, with the market expected to struggle, according to Mr Pabst.

"We are already seeing an over-supply of high-rises being constructed or in planning,'' he said.

But Mr Yates said interest from foreign buyers, particularly from Malaysia, appeared to ensure demand continued for high rises close to town.

WILL 2013 BE NAUGHTY OR NICE?Experts have their say on the best and worst things that could happen to the market in 2013.

Robert LaroccaNICE: Consumer confidence to return in a sustained and ongoing fashion that would ensure improved competition.NAUGHTY: Either Victorian or Australian economic growth rate dropping and increases in unemployment.

Michael YatesNICE: I'd like to see an end to the political antics that are denting people's confidence - so an election will be welcome.NAUGHTY: I wouldn't want to see rates to go up.

Greville PabstNICE: People to make intelligent decisions when they buy properties.NAUGHTY: The oversupply in our market concerns me, particularly apartments - there's potentially big issues in the CBD and Docklands.

Paul NugentNICE: I'd like to see current conditions continue - confidence, but not a market driven by hysteria.NAUGHTY: The last thing I'd like to see would be a large swing in interest rates in either direction.

Nigel O'NeilNICE: Stamp duty costs to be reduced and interest rates to remain low; keeping rates low will continue to fuel Melbourne's property market.NAUGHTY: If the RBA were to stop cutting interest rates.

Cameron KusherNICE: You would hope that prices would be the same at the end of the 12 months.NAUGHTY: A lot of new supply coming on to the market or more people bringing their properties for sale.